Wall Street dipped slightly on Friday, breaking a five-session rally, as energy shares declined and investors looked ahead to earnings season, which kicks off next week with Citigroup, JPMorgan and other big banks.

Underpinned by optimism over China-U.S. trade talks and expectations of a slow pace of interest rate hikes from the Federal Reserve, the stock market's winning streak through Thursday added 6 percent to the S&P 500 and left it up about 10 percent from the 20-month low it hit around Christmas....See More
The S&P 500 on Friday ended down just 0.01 percent after recovering from a loss of 0.74 percent earlier in the session.

"We've clawed our way back and now the market is just waiting ahead of the start of earnings season next week," said Donald Selkin, Chief Market Strategist at Newbridge Securities in New York. "We're just drifting."

The S&P energy index was off 0.63 percent, leading declines among 11 sectors, as oil prices dropped after nine days of gains. [O/R]

The financial index climbed 0.17 percent. Citigroup Inc, which will report earnings on Monday, rose 0.44 percent after agreeing to give shareholder ValueAct Capital more access to its books and board of directors.

JPMorgan Chase & Co, which reports on Tuesday, declined 0.48 percent. Some bargain hunters are betting on a stronger 2019 for banks after the S&P 500 bank index fell 18.4 percent in 2018.

U.S. stocks took a severe beating in the last quarter of 2018 due to worries over trade, interest rate hikes and a slowdown in global growth.

Analysts expect S&P 500 companies' earnings per share to grow by 6.4 percent this year, compared with 23.5 percent in 2018, when they were supercharged by newly enacted corporate tax cuts, according to IBES data from Refinitiv.

General Motors gave a strong earnings forecast for 2019, sending the automaker's shares surging 7.05 percent.

The Dow Jones Industrial Average ended down 0.02 percent at 23,995.95 points, while the Nasdaq Composite dropped 0.21 percent to 6,971.48.
•••••••••••••

"Wall Street's five-day rally flickers out as earnings near"
Wall Street dipped slightly on Friday, breaking a five-session rally, as energy shares declined and investors looked ahead to earnings season, which kicks off next week with Citigroup, JPMorgan and other big banks.
Underpinned by optimism over China-U.S. trade talks and expectations of a slow pace of interest rate hikes from the Federal Reserve, the stock market's winning streak through Thursday added 6 percent to the S&P 500 and left it up about 10 percent from the 20-month low it hit around Christmas.
The S&P 500 on Friday ended down just 0.01 percent after recovering from a loss of 0.74 percent earlier in the session.
"We've clawed our way back and now the market is just waiting ahead of the start of earnings season next week," said Donald Selkin, Chief Market Strategist at Newbridge Securities in New York. "We're just drifting."
The S&P energy index was off 0.63 percent, leading declines among 11 sectors, as oil prices dropped after nine days of gains. [O/R]
The financial index climbed 0.17 percent. Citigroup Inc, which will report earnings on Monday, rose 0.44 percent after agreeing to give shareholder ValueAct Capital more access to its books and board of directors.
JPMorgan Chase & Co, which reports on Tuesday, declined 0.48 percent. Some bargain hunters are betting on a stronger 2019 for banks after the S&P 500 bank index fell 18.4 percent in 2018.
U.S. stocks took a severe beating in the last quarter of 2018 due to worries over trade, interest rate hikes and a slowdown in global growth.
Analysts expect S&P 500 companies' earnings per share to grow by 6.4 percent this year, compared with 23.5 percent in 2018, when they were supercharged by newly enacted corporate tax cuts, according to IBES data from Refinitiv.
General Motors gave a strong earnings forecast for 2019, sending the automaker's shares surging 7.05 percent.
The Dow Jones Industrial Average ended down 0.02 percent at 23,995.95 points, while the Nasdaq Composite dropped 0.21 percent to 6,971.48.
•••••••••••••
"Wall Street's five-day rally flickers out as earnings near" - http://www.reuters.com/article/us-usa-stocks/wall-streets-five-day-rally-flickers-out-as-earnings-near-idUSKCN1P51FS

■ UNVR’s share price has declined over the past 2 weeks as the talks of a change in LQ45 and IDX30 to free float adjusted weightings materialised.
■ Based on IDX’s assessment, UNVR’s weighting in LQ45 could drop from 7.6% at end-Oct 18 to 3.1% in Feb 19 (after rebalancing).
■ This may hit its lofty valuation which may revert to pre-1Q16 levels when it traded at 158% premium to its DDM, in our estimate. Cut TP to Rp31,700.

...See More
► With 56% of the total revenue came from the export sales, SRIL’s earnings are considered naturally hedged
against Rupiah depreciation. Furthermore, the company may be benefitted from the trade war between China
and US, as there is rising demand from US retailers to non-China garment producers, including SRIL.

► An integrated textile and garment company... SRIL is Indonesia’s leading vertically integrated textile-garment
producer with FY17F total revenue of USD 759mn, which was significantly higher than other major players in the
country, including Pan Brothers (USD 549mn) and Ever Shine Tex (USD35mn). The company engages in both
upstream and downstream processes, including spinning, weaving, dyeing/printing, and garment, which allows
more optimal coordination and swift production process. SRIL’s production facilities are on close proximity to
each other and an international port, allowing it to have transportation cost efficiency. Company’s operational
area in Central Java is having lower wages level compared to its neighboring regions, West Java and East Java,
resulting in competitive labor cost. In addition, Central Java is also known as one of the biggest textile centers in
the country, providing the company with skillful workforce

► .. with world-class consumer base. With top-notch expertise in the textile business, SRIL has been appointed as
one of major suppliers of army uniforms to several nations, including NATO members. It also supplies big
fashion brands such as H&M, Disney, Guess, Uniqlo, in addition to retailers such as Walmart, TJ Maxx, and Sears.
In domestic market, the company manufactures uniforms for companies, both private and government agencies.
Aside from its garment products, SRIL also supplies prominent buyers such as Japanese trading company
Marubeni Corporations, Belgian textile trader Chemitex, Chinese textile company Shengrun Textile, etc. With
worldwide and diversified customer base, SRIL is expected to have lower business risk as it does not need to be
dependent to just a few customers.

► Naturally hedged against Rupiah depreciation. SRIL is considered to be naturally hedged against currency
fluctuation. About 53% of its revenue in 9M18 came from export sales and the exposure to export sales was in
increasing trend over the past four years. On the other hand, the value of its raw material import was roughly
about 44% of total revenue, in addition to USD denominated financing costs which accounted about 6.6% of
9M18 total revenue.

► Opportunity from US-China trade war. Ongoing trade war between US and China may bring opportunity for the
company to regain share in US markets, which has been falling in the past two years. Rupiah depreciation,
attractive cost structure, and SRIL’s well-known expertise would provide opportunity for the company to get
some orders previously fulfilled by China producers. The management expects export to US increasing to
around 6% of total revenue next year from around 4% currently.

► Valuation. SRIL is currently trading at 5.4x LTM P/E, which is at the lower end of range compared to peers.
However, taking out the one-time gain from the acquisition of subsidiaries, it is trading at around 8x LTM P/E
vs. peers’ of between 2.2x-32.5x. Meanwhile, the counter’s EV/sales and EV/EBITDA are at 1.2x and 5.8x,
relatively at the middle of the range of 0.2x-2.1x and 1.7x-14.8x, respectively. In the past twelve months, the
company managed to grow its sales at higher pace of 26.1% YoY compared to most of its peers of below 20%
YoY. Next year, it targets a conservative 15% YoY revenue growth supported by major capacity expansion in the
past two years.

Yuanta (FS)
Sri Rejeki Isman (SRIL IJ)
Indonesia’s textile giant
► With 56% of the total revenue came from the export sales, SRIL’s earnings are considered naturally hedged
against Rupiah depreciation. Furthermore, the company may be benefitted from the trade war between China
and US, as there is rising demand from US retailers to non-China garment producers, including SRIL.
► An integrated textile and garment company... SRIL is Indonesia’s leading vertically integrated textile-garment
producer with FY17F total revenue of USD 759mn, which was significantly higher than other major players in the
country, including Pan Brothers (USD 549mn) and Ever Shine Tex (USD35mn). The company engages in both
upstream and downstream processes, including spinning, weaving, dyeing/printing, and garment, which allows
more optimal coordination and swift production process. SRIL’s production facilities are on close proximity to
each other and an international port, allowing it to have transportation cost efficiency. Company’s operational
area in Central Java is having lower wages level compared to its neighboring regions, West Java and East Java,
resulting in competitive labor cost. In addition, Central Java is also known as one of the biggest textile centers in
the country, providing the company with skillful workforce
► .. with world-class consumer base. With top-notch expertise in the textile business, SRIL has been appointed as
one of major suppliers of army uniforms to several nations, including NATO members. It also supplies big
fashion brands such as H&M, Disney, Guess, Uniqlo, in addition to retailers such as Walmart, TJ Maxx, and Sears.
In domestic market, the company manufactures uniforms for companies, both private and government agencies.
Aside from its garment products, SRIL also supplies prominent buyers such as Japanese trading company
Marubeni Corporations, Belgian textile trader Chemitex, Chinese textile company Shengrun Textile, etc. With
worldwide and diversified customer base, SRIL is expected to have lower business risk as it does not need to be
dependent to just a few customers.
► Naturally hedged against Rupiah depreciation. SRIL is considered to be naturally hedged against currency
fluctuation. About 53% of its revenue in 9M18 came from export sales and the exposure to export sales was in
increasing trend over the past four years. On the other hand, the value of its raw material import was roughly
about 44% of total revenue, in addition to USD denominated financing costs which accounted about 6.6% of
9M18 total revenue.
► Opportunity from US-China trade war. Ongoing trade war between US and China may bring opportunity for the
company to regain share in US markets, which has been falling in the past two years. Rupiah depreciation,
attractive cost structure, and SRIL’s well-known expertise would provide opportunity for the company to get
some orders previously fulfilled by China producers. The management expects export to US increasing to
around 6% of total revenue next year from around 4% currently.
► Valuation. SRIL is currently trading at 5.4x LTM P/E, which is at the lower end of range compared to peers.
However, taking out the one-time gain from the acquisition of subsidiaries, it is trading at around 8x LTM P/E
vs. peers’ of between 2.2x-32.5x. Meanwhile, the counter’s EV/sales and EV/EBITDA are at 1.2x and 5.8x,
relatively at the middle of the range of 0.2x-2.1x and 1.7x-14.8x, respectively. In the past twelve months, the
company managed to grow its sales at higher pace of 26.1% YoY compared to most of its peers of below 20%
YoY. Next year, it targets a conservative 15% YoY revenue growth supported by major capacity expansion in the
past two years.

The execution of Strategy 2022 – “Building for Growth” is at full speed and well on track on all four value drivers: Growth, Simplification & Performance, Financial Strength and Vision & People....See More
On Growth: to date four bolt-on acquisitions have already been completed in highly attractive markets, the most recent being the acquisition of Denver (US)-based ready-mix concrete manufacturer Metro Mix in August. The July 2018 acquisition of the Vritz sandpit (FR) helps secure reserves in a well-positioned market for the next three decades. The business segments Aggregates and Ready-Mix Concrete achieved improved margins, a significant step in the implementation of the company’s Strategy 2022 - “Building for Growth”.

On Simplification & Performance: with the successful implementation of a new operating model based on a corporate-light structure and simple reporting lines, the company has achieved significant progress in its CHF 400 million SG&A savings program. The execution of this program is ahead of plan and has started to deliver results in Q3. The corporate offices in Singapore and Miami have been closed and the Zurich and Paris offices will be closed within Q1 2019.

On Financial Strength: since June 2018, more than CHF 1.3 billion has been successfully refinanced at attractive terms leading to an improved debt maturity profile and a decrease in financing costs. Progress towards the divestment target of CHF 2 billion has been made.

SMCB
STRATEGY 2022
The execution of Strategy 2022 – “Building for Growth” is at full speed and well on track on all four value drivers: Growth, Simplification & Performance, Financial Strength and Vision & People.
On Growth: to date four bolt-on acquisitions have already been completed in highly attractive markets, the most recent being the acquisition of Denver (US)-based ready-mix concrete manufacturer Metro Mix in August. The July 2018 acquisition of the Vritz sandpit (FR) helps secure reserves in a well-positioned market for the next three decades. The business segments Aggregates and Ready-Mix Concrete achieved improved margins, a significant step in the implementation of the company’s Strategy 2022 - “Building for Growth”.
On Simplification & Performance: with the successful implementation of a new operating model based on a corporate-light structure and simple reporting lines, the company has achieved significant progress in its CHF 400 million SG&A savings program. The execution of this program is ahead of plan and has started to deliver results in Q3. The corporate offices in Singapore and Miami have been closed and the Zurich and Paris offices will be closed within Q1 2019.
On Financial Strength: since June 2018, more than CHF 1.3 billion has been successfully refinanced at attractive terms leading to an improved debt maturity profile and a decrease in financing costs. Progress towards the divestment target of CHF 2 billion has been made.
https://www.lafargeholcim.com/q3-2018-trading-update

- Based on our observation, companies under our coverage (GGRM & HMSP) have sold more lower-priced products in 1H18. In our view, lower-income people have deeper pockets for spending on items like cigarettes thanks to various populist/social aid policies (village fund, conditional cash transfers, etc.) that the government is implementing in an attempt to boost purchasing power as the election year approaches....See More
- We downgrade our call on the sector to Neutral.

Therefore, our preference still lies with GGRM due to 1) it is the leading producer of SKM FF cigarettes in the market; 90% of GGRM’s sales come from SKM (vs. 67% at HMSP), 2) our EPS growth forecast for 2018 for GGRM is higher than HMSP (10% vs 4% YoY), 3) attractive valuation.
(See: https://goo.gl/BhYoof)

Sector Update
Tobacco - The expansion of SKM market share continues by Christine Natasya (natasya@miraeasset.co.id)
Oct 18, 2018
- Based on our observation, companies under our coverage (GGRM & HMSP) have sold more lower-priced products in 1H18. In our view, lower-income people have deeper pockets for spending on items like cigarettes thanks to various populist/social aid policies (village fund, conditional cash transfers, etc.) that the government is implementing in an attempt to boost purchasing power as the election year approaches.
- We downgrade our call on the sector to Neutral.
Therefore, our preference still lies with GGRM due to 1) it is the leading producer of SKM FF cigarettes in the market; 90% of GGRM’s sales come from SKM (vs. 67% at HMSP), 2) our EPS growth forecast for 2018 for GGRM is higher than HMSP (10% vs 4% YoY), 3) attractive valuation.
(See: https://goo.gl/BhYoof)

■ The 8M18 new contracts booking is better than expected at Rp2.6tr, having already surpassed our previous new contracts estimate for the full year FY18F of Rp2.5tr.
■ But TOTL has guided for a hefty downward revision in FY18F revenue and net profit, both by 16%, blaming it on the current muted property market.
■ As such, we cut our core EPS in FY18-20F by 4.8-10.3%, leading to a lower TP of Rp660, based on 9.9x FY19F P/E (-1 s.d. below 3-year mean).
■ We keep our Hold call given: 1) its robust balance sheet and above peers’ and the market’s dividend yields; 2) share price may have bottomed, though lacking catalysts

■ We think there are potentially two negative surprises in store: 1) additional VAT at the distributor level, and 2) specific excise tax to cover the universal healthcare deficit.
■ Going by past experience, such as in 2014 when excise tax was flat in favour of a 10% regional tax, the net increase could again be capped at c.9-10%.
■ Given the ongoing cigarette industry consolidation, an aggressive hike would inflict more pain and job losses, something the government may avoid in an election year.
■ Our estimate is for a c.9% excise tax hike in 2019F, with stick prices to be announced in Sep/Oct 18. The state budget on 17 Aug should provide more clarity....See More
■ Maintain Overweight on the sector with our preference for GGRM.
[15:50, 8/16/2018] +62 815-7319-0777: FR CGS-CIMb (YU) : Economic Update | PDF
Aug 2018 BI meeting
Author(s):Yee Ping LIM +60 (3) 2261 9083, Michelle CHIA

■ News reports say the government plans to restrict imports of capital goods (for SOE), some 500 consumer goods and online sales imports, amid the financial volatility.
■ This is not a new fix. A similar policy was implemented a few years ago in a bid to stabilise the rupiah. The measures were relaxed once volatility subsided.
■ Any adverse impact would be short term, in our view. However, it could limit procurement or increase the cost to retailers with high imports, like ACES and MAPI.
■ Consumer staples should be largely unaffected given that they have lower import content and their import needs have few local substitutes.

■ We think there are potentially two negative surprises in store: 1) additional VAT at the distributor level, and 2) specific excise tax to cover the universal healthcare deficit.
■ Going by past experience, such as in 2014 when excise tax was flat in favour of a 10% regional tax, the net increase could again be capped at c.9-10%.
■ Given the ongoing cigarette industry consolidation, an aggressive hike would inflict more pain and job losses, something the government may avoid in an election year.
■ Our estimate is for a c.9% excise tax hike in 2019F, with stick prices to be announced in Sep/Oct 18. The state budget on 17 Aug should provide more clarity.
■ Maintain Overweight on the sector with our preference for GGRM.
[15:50, 8/16/2018] +62 815-7319-0777: FR CGS-CIMb (YU) : Economic Update | PDF
Aug 2018 BI meeting
Author(s):Yee Ping LIM +60 (3) 2261 9083, Michelle CHIA
--------------------------------------------------------------------------------
■ Bank Indonesia (BI) raised its 7-day Reverse Repo Rate (7DRRR) by 25bp to 5.50% in an effort to maintain financial stability and manage the current account deficit.
■ The rate hike is aimed at maintaining attractive yield differentials, particularly with US interest rates, to stem outflows of portfolio investments and further rupiah weakness.
■ Yesterday’s decision complements the government’s recent import reduction measures to rectify the deteriorating current account deficit.
■ However, the persistence of external uncertainty is likely to keep pressure on EMs, leading us to pencil in a further 25bp policy rate hike for a year-end target of 5.75%.
[15:51, 8/16/2018] +62 815-7319-0777: FR CGS-CIMB (YU) : Cement | PDF
Jul 18 volume: better-than-expected demand pick-up
UNDERWEIGHT - Maintained
Author(s):Jovent GIOVANNY +62 (21) 3006 1727, Timothy HANDERSON
--------------------------------------------------------------------------------
■ National cement sales grew by 13% yoy (+91% mom) in Jul, which brought the cumulative 7M18 growth to 5% yoy.
■ Jun-Jul volume grew 4% yoy (vs. 5-yr avg of +1% yoy) despite a longer Lebaran holiday in Jun 18 – largely due to bag cement (+5% yoy) as opposed to bulk (flat).
■ Incumbents gained more traction in Jun-Jul (especially INTP and SMCB). Merah Putih and Bima slowed down, while Conch still grew at an impressive pace.
■ Our check suggests that retail pricing in Greater Jakarta has been stable since Apr.
■ We maintain Underweight amid steep valuations and higher costs outlook. INTP is ourpreferred pick over SMGR. Upside risk is stronger demand recovery.
[15:52, 8/16/2018] +62 815-7319-0777: FR CGS-CIMb (YU) : Bank Permata | PDF
2Q18 results: pick-up in loan growth and margin; drop in headline profit largely due to one-off item
BNLI IJ / BNLI.JK | ADD - Maintained | Rp520.00 tp:Rp700.00
Mkt.Cap:US$999.90m | Avg.Daily Vol:US$0.51m | Free Float:10.80%
Banks
Author(s):Timothy HANDERSON +62 (21) 30061724, Jovent GIOVANNY
--------------------------------------------------------------------------------
■ BNLI’s 1H18 net profit of Rp289bn (-53% yoy) was below at 42% of our FY18F estimate. Lower headline profit was due to a one-off gain from NPL sale in 1H17.
■ NIM improved to 4% in 1H18 from 3.8% in 1H17 largely due to lower cost of funds. We expect stable NIM in 2H as higher COF could be offset by strong loan growth.
■ Loan growth was robust (+11% yoy/+3% qoq), largely driven by retail (auto, mortgage, SME). Corporate loan also saw a pick-up although disbursements remain selective.
■ NPL improved to 4.3% in 2Q18 from 4.7% in 2Q17. SML rose to 13.6% in 2Q18 from 12.8% in 2Q17. Loans-at-risk rose improved to 20.5% in 2Q18 from 21.2% in 2Q17.
■ Maintain Add. BNLI is our top pick among the small banks
[15:53, 8/16/2018] +62 815-7319-0777: FR CGS-CIMB (YU) : Consumer Discretionary - Overall | PDF
Impact of new import restrictions
OVERWEIGHT - Maintained
Author(s):Kevie ADITYA +62 (21) 3006 1738, Patricia GABRIELA
--------------------------------------------------------------------------------
■ News reports say the government plans to restrict imports of capital goods (for SOE), some 500 consumer goods and online sales imports, amid the financial volatility.
■ This is not a new fix. A similar policy was implemented a few years ago in a bid to stabilise the rupiah. The measures were relaxed once volatility subsided.
■ Any adverse impact would be short term, in our view. However, it could limit procurement or increase the cost to retailers with high imports, like ACES and MAPI.
■ Consumer staples should be largely unaffected given that they have lower import content and their import needs have few local substitutes.

■ Bank Indonesia (BI) raised its 7-day Reverse Repo Rate (7DRRR) by 25bp to 5.50% in an effort to maintain financial stability and manage the current account deficit.
■ The rate hike is aimed at maintaining attractive yield differentials, particularly with US interest rates, to stem outflows of portfolio investments and further rupiah weakness.
■ Yesterday’s decision complements the government’s recent import reduction measures to rectify the deteriorating current account deficit.
■ However, the persistence of external uncertainty is likely to keep pressure on EMs, leading us to pencil in a further 25bp policy rate hike for a year-end target of 5.75%.

■ Bank Indonesia (BI) raised its 7-day Reverse Repo Rate (7DRRR) by 25bp to 5.50% in an effort to maintain financial stability and manage the current account deficit.
■ The rate hike is aimed at maintaining attractive yield differentials, particularly with US interest rates, to stem outflows of portfolio investments and further rupiah weakness.
■ Yesterday’s decision complements the government’s recent import reduction measures to rectify the deteriorating current account deficit.
■ However, the persistence of external uncertainty is likely to keep pressure on EMs, leading us to pencil in a further 25bp policy rate hike for a year-end target of 5.75%.

Market comment by Taye Shim (taye.shim@miraeasset.com)
As largely expected, JCI kicked off the first trading day of 2H17 with a solid rally leading the index to a new record high. This is broadly in line with our BUY INDONESIA theme which we introduced end of last year. China's Caixin manufacturing PMI posted surprise expansion for the month of June (reported 50.4 vs. consensus 49.5) which was in line with the official PMI. This was supported by US ISM manufacturing PMI which printed 57.8, beating estimates of 55.2. Foreign investors were net buyers (IDR477bn) of the local market driving the rally. #RANKING CHANGES: TLKM (new historical high) is now undisputed largest market cap (IDR482.8tr) name in the JCI followed by BBCA (IDR451.6tr) and HMSP (IDR447.8tr). #BUYING CRITERIA? TLKM rallied 6% yesterday, driven by aggressive foreign net buying. We think foreign investors were BUYing INDONESIA proxies based on valuations. Post-rally valuation (17F P/E) for TLKM stands at 20.63x, BBCA @ 19.95x, HSMP @ 33.05x...See More
Market Indicator
JCI: 5,910.237 (+1.38%)
EIDO: 27.39 (+0.66%)
DJIA: 21,479.27 (+0.61%)
FTSE100: 7,377.09 (+0.88%)
USD/IDR: 13,368 (+0.15%)
10yr GB yield: 6.88% (+5bps)
Oil Price: 47.07 (+2.24%)
Foreign net purchase: IDR476.8bn

*ISM manufacturing index rises to 57.8 in June from 54.9, at highest level since 2014
*IHS Markit manufacturing PMI falls to 52.0 in June from 52.7
*Eurozone unemployment stays at 9.3% in May, lowest since March 2009
*U.K. manufacturing PMI slips to 3-month low at 54.3 in June, missing forecasts
*Eurozone June manufacturing PMI comes in at 57.4, compared with 57.3 flash estimate
*Germany's June manufacturing PMI comes in at 59.6, compared with 59.3 flash estimate
*France June manufacturing PMI comes in at 54.8, compared with 55.0 flash estimate

*TLKM +5.9%, leading gain in Indonesian stocks today after better-than-expected June inflation data, signaling recovery in consumer purchasing power.
*BIRD +3.9%. Blue Bird led gains in taxi company stocks amid positive sentiment over the government regulation of minimum and maximum prices for online car transportation services.
*MLPL +0.9%. Multipolar signed a $250 million loan from Bank Negara Indonesia.
*TINS +0.6%. In 1Q17, Timah posted a net profit of IDR66.5 billion after suffering a loss of IDR138.9 billion in the same period last year.
*ADRO +3.1%. Adaro Energy is rated BBB- with a positive outlook from Japan Credit Agency (JCA).
*ROTI -0.8%. In 1Q17, Nippon Indosari's net profit dropped by 65% yoy to IDR29.9 billion. Meanwhile, sales fell to IDR602.4 billion vs IDR610.9 billion.

- With SSMS still keeping its floor CPO extraction rate at 23.0% for 2017F, we believe its total FFB production will still see domination from nucleus plantation this year.

- As mentioned in our previous report on 2H17F palm oil sector outlook, “Dark clouds on the horizon”, SSMS targets a whopping 150,000 ha in total planted area by 2018 (from just 34,000 ha in 2014).

- Given the S&P’s rating upgrade, SSMS will refinance its bank loans through bond issuance. In our view, this should be a good time for SSMS to refinance its debt due to lower cost of funds going forward.

- We maintain our 12-month forward TP for SSMS at IDR1,900 with a Trading Buy call. We like SSMS mainly thanks to the young age profile of its palm oil plantations.

SGRO targets to increase CPO production by 30% (Kontan)
SGRO targets this year's CPO production volume to increase 20% to 30% compared to last year’s realization.

MNCN to maintain 10% growth performance (Bisnis Indonesia)
MNCN is optimistic to maintain a CAGR of 10% growth in the next 5 years, along with optimism that television industry will still dominate the Indonesian advertising market.

Double digit credit growth in sight (Bisnis Indonesia)
Bank’s credit growth in 1H17 is predicted to reach double digit, and will continue to improve in the next semester.

Multipolar gets a USD250mn of loans (Investor Daily)
PT Multipolar Tbk (MLPL) gets new borrowings amounting USD250mn from PT Bank Negara Indonesia Tbk (BBNI). The proceeds of that loans will be used for refinancing and working capital.

(Jakarta Globe)
Indonesian diaspora network presents leadership award to Jokowi for looking after expats
Indonesia to join FATF in war against money laundering and terrorism funding
Indonesia’s inflation rate picks up slightly in June
Indonesia hopes for additional USD10bn inflows after S&P upgrade, president says
It’s 7-eleven Indonesia, not the retail industry: Fitch
Most SE Asia stocks gain as China data cheers, Indonesia at record closing high

Mirae Asset Sekuritas Indonesia Daily Focus (July 4, 2017)
Research Team (research@miraeasset.co.id)
Market comment by Taye Shim (taye.shim@miraeasset.com)
As largely expected, JCI kicked off the first trading day of 2H17 with a solid rally leading the index to a new record high. This is broadly in line with our BUY INDONESIA theme which we introduced end of last year. China's Caixin manufacturing PMI posted surprise expansion for the month of June (reported 50.4 vs. consensus 49.5) which was in line with the official PMI. This was supported by US ISM manufacturing PMI which printed 57.8, beating estimates of 55.2. Foreign investors were net buyers (IDR477bn) of the local market driving the rally. #RANKING CHANGES: TLKM (new historical high) is now undisputed largest market cap (IDR482.8tr) name in the JCI followed by BBCA (IDR451.6tr) and HMSP (IDR447.8tr). #BUYING CRITERIA? TLKM rallied 6% yesterday, driven by aggressive foreign net buying. We think foreign investors were BUYing INDONESIA proxies based on valuations. Post-rally valuation (17F P/E) for TLKM stands at 20.63x, BBCA @ 19.95x, HSMP @ 33.05x
Market Indicator
JCI: 5,910.237 (+1.38%)
EIDO: 27.39 (+0.66%)
DJIA: 21,479.27 (+0.61%)
FTSE100: 7,377.09 (+0.88%)
USD/IDR: 13,368 (+0.15%)
10yr GB yield: 6.88% (+5bps)
Oil Price: 47.07 (+2.24%)
Foreign net purchase: IDR476.8bn
Foreign net purchase on single stocks (HOTS screen #0141)
TOP BUY: TLKM, UNTR, PGAS, INDF, BMRI
TOP SELL: ASII, BBRI, BBNI, JSMR, RALS
Most actively traded stocks (HOTS screen #0102)
TLKM, BBCA, BBRI, ASII, BMRI
Mirae Asset Sekuritas Indonesia Equity Movers
Investment Information Team (utfi.humaya@miraeasset.co.id)
*ISM manufacturing index rises to 57.8 in June from 54.9, at highest level since 2014
*IHS Markit manufacturing PMI falls to 52.0 in June from 52.7
*Eurozone unemployment stays at 9.3% in May, lowest since March 2009
*U.K. manufacturing PMI slips to 3-month low at 54.3 in June, missing forecasts
*Eurozone June manufacturing PMI comes in at 57.4, compared with 57.3 flash estimate
*Germany's June manufacturing PMI comes in at 59.6, compared with 59.3 flash estimate
*France June manufacturing PMI comes in at 54.8, compared with 55.0 flash estimate
*TLKM +5.9%, leading gain in Indonesian stocks today after better-than-expected June inflation data, signaling recovery in consumer purchasing power.
*BIRD +3.9%. Blue Bird led gains in taxi company stocks amid positive sentiment over the government regulation of minimum and maximum prices for online car transportation services.
*MLPL +0.9%. Multipolar signed a $250 million loan from Bank Negara Indonesia.
*TINS +0.6%. In 1Q17, Timah posted a net profit of IDR66.5 billion after suffering a loss of IDR138.9 billion in the same period last year.
*ADRO +3.1%. Adaro Energy is rated BBB- with a positive outlook from Japan Credit Agency (JCA).
*ROTI -0.8%. In 1Q17, Nippon Indosari's net profit dropped by 65% yoy to IDR29.9 billion. Meanwhile, sales fell to IDR602.4 billion vs IDR610.9 billion.
Daily write up
Sawit Sumbermas Sarana (SSMS) : Every cloud has a silver lining by Andy Wibowo Gunawan (andy.wibowo@miraeasset.co.id)
- With SSMS still keeping its floor CPO extraction rate at 23.0% for 2017F, we believe its total FFB production will still see domination from nucleus plantation this year.
- As mentioned in our previous report on 2H17F palm oil sector outlook, “Dark clouds on the horizon”, SSMS targets a whopping 150,000 ha in total planted area by 2018 (from just 34,000 ha in 2014).
- Given the S&P’s rating upgrade, SSMS will refinance its bank loans through bond issuance. In our view, this should be a good time for SSMS to refinance its debt due to lower cost of funds going forward.
- We maintain our 12-month forward TP for SSMS at IDR1,900 with a Trading Buy call. We like SSMS mainly thanks to the young age profile of its palm oil plantations.
<Market Headlines>
Lotte Chemical Titan cut IPO targets (Kontan)
Lotte Chemical Titan will do IPO USD1.12bn in Malaysia for expansion in Indonesia.
SGRO targets to increase CPO production by 30% (Kontan)
SGRO targets this year's CPO production volume to increase 20% to 30% compared to last year’s realization.
MNCN to maintain 10% growth performance (Bisnis Indonesia)
MNCN is optimistic to maintain a CAGR of 10% growth in the next 5 years, along with optimism that television industry will still dominate the Indonesian advertising market.
Double digit credit growth in sight (Bisnis Indonesia)
Bank’s credit growth in 1H17 is predicted to reach double digit, and will continue to improve in the next semester.
Multipolar gets a USD250mn of loans (Investor Daily)
PT Multipolar Tbk (MLPL) gets new borrowings amounting USD250mn from PT Bank Negara Indonesia Tbk (BBNI). The proceeds of that loans will be used for refinancing and working capital.
Nusantara Infrastructure will not distribute dividend (Investor Daily)
PT Nusantara Infrastructure Tbk (META) will not distribute dividend. As a note that META’s net profit reached IDR220bn in 2016.
(Jakarta Post)
JCI at full throttle after long break
Inflationary pressure may recede as food prices ease off
Foreign tourists: Despite tension, RI sees jump in arrivals
RI eyes euro bond issuance amid rating upgrade, stable market
Govt to lobby FPNI to realize investment
Coal price recovery encourages BYAN to aim higher
(Jakarta Globe)
Indonesian diaspora network presents leadership award to Jokowi for looking after expats
Indonesia to join FATF in war against money laundering and terrorism funding
Indonesia’s inflation rate picks up slightly in June
Indonesia hopes for additional USD10bn inflows after S&P upgrade, president says
It’s 7-eleven Indonesia, not the retail industry: Fitch
Most SE Asia stocks gain as China data cheers, Indonesia at record closing high

*• Integra Indocabinet Overview* :
~~PT. Integra Indocabinet was established in 1989. The company’s initial production were plastic and wooden CD racks for US market. As the company gained more experience in production process, it started to invest in machineries to produce simple furniture which led to the company’s rapid growth in business and in its global recognition as a leading furniture manufacturer company. (80% Export, 20% Domestic)

The shrinking spread between yields on short and longer-term U.S. debt is front-and-center in markets. The bond market is signaling the Federal Reserve may be committing a policy error by continuing to raise its policy rate in the face of below-target—and decelerating—inflation. The divide between monetary policymakers and fixed-income markets suggests traders are trying to dissuade the central bank from following through on its tightening plans.

*》Exit Strategy?*

The Bank of Japan is slated to deliver its interest rate decision on Friday, with economists expecting the central bank to keep its policy rate and 10-year yield target unchanged at -0.1 and 0 percent, respectively. What may change, however, is how many bonds the Bank of Japan aims to purchase per year after Governor Haruhiko Kuroda admitted that the pace of purchases has fallen meaningfully shy of its annual target. The governor will hold a press conference at 3:30 p.m. Tokyo time. Shares of Japanese exporters struggled Thursday and could be in for a rough time Friday if the Bank of Japan makes any reference to an exit strategy from its unprecedented unconventional easing program.

*》$1.09 Trillion*

In April, China's holdings of U.S. Treasuries rose to their highest level since October, the third consecutive monthly increase. Roughly $1.09 trillion in American debt is owned by the Chinese. Earlier this month, reports surfaced that the world's second largest economy was ready to add to its hoard of Treasuries as its currency stabilized. China's central bank declined to follow the Fed in hiking rates on Thursday, a switch from the last time Janet Yellen and her counterparts delivered an increase in March.

*》Tech Difficulties*

The technology-centric selloff is back on. Benchmark U.S. equity indexes declined Thursday, with mega-cap tech names leading the way down. Oil prices continued to retreat with West Texas Intermediate futures falling as low as $44.22 per barrel. Shares of social media company Snap Inc. briefly touched their March IPO price before rebounding on heavy volume.

*》Futures Up*

Despite the retreat in U.S. risk assets, the Japanese yen was the worst-performing G10 currency Thursday. Nikkei 225 and S&P/ASX 200 futures are in positive territory as of 5:30 a.m. Tokyo time after both indexes gave back ground the prior session. Asia Pacific stocks stumbled Thursday, with particularly poor showings from energy companies.

*Five Things You Need to Know to Start Your Day*
Get caught up on what’s moving markets in Asia.
by Luke Kawa
Fri Jun 16 2017 04:28:56 GMT+0700 (WIB)
*》Investors fear Fed policy error, Bank of Japan on deck, and China's Treasury holdings rise to six-month high.*
*Here are some of the things people in markets are talking about.*
*》The Feared Flattener*
The shrinking spread between yields on short and longer-term U.S. debt is front-and-center in markets. The bond market is signaling the Federal Reserve may be committing a policy error by continuing to raise its policy rate in the face of below-target—and decelerating—inflation. The divide between monetary policymakers and fixed-income markets suggests traders are trying to dissuade the central bank from following through on its tightening plans.
*》Exit Strategy?*
The Bank of Japan is slated to deliver its interest rate decision on Friday, with economists expecting the central bank to keep its policy rate and 10-year yield target unchanged at -0.1 and 0 percent, respectively. What may change, however, is how many bonds the Bank of Japan aims to purchase per year after Governor Haruhiko Kuroda admitted that the pace of purchases has fallen meaningfully shy of its annual target. The governor will hold a press conference at 3:30 p.m. Tokyo time. Shares of Japanese exporters struggled Thursday and could be in for a rough time Friday if the Bank of Japan makes any reference to an exit strategy from its unprecedented unconventional easing program.
*》$1.09 Trillion*
In April, China's holdings of U.S. Treasuries rose to their highest level since October, the third consecutive monthly increase. Roughly $1.09 trillion in American debt is owned by the Chinese. Earlier this month, reports surfaced that the world's second largest economy was ready to add to its hoard of Treasuries as its currency stabilized. China's central bank declined to follow the Fed in hiking rates on Thursday, a switch from the last time Janet Yellen and her counterparts delivered an increase in March.
*》Tech Difficulties*
The technology-centric selloff is back on. Benchmark U.S. equity indexes declined Thursday, with mega-cap tech names leading the way down. Oil prices continued to retreat with West Texas Intermediate futures falling as low as $44.22 per barrel. Shares of social media company Snap Inc. briefly touched their March IPO price before rebounding on heavy volume.
*》Futures Up*
Despite the retreat in U.S. risk assets, the Japanese yen was the worst-performing G10 currency Thursday. Nikkei 225 and S&P/ASX 200 futures are in positive territory as of 5:30 a.m. Tokyo time after both indexes gave back ground the prior session. Asia Pacific stocks stumbled Thursday, with particularly poor showings from energy companies.
*What we’ve been reading*
The potential winners from U.S. bank deregulation.
Bitcoin gets crushed.
BOE trio wants to hike rates now.
The Fed Chair sweepstakes.
Greece's creditors agree to payout.
Mexican equities now beating Russia's since the U.S. election.
The case for Summer Fridays.
*******
Five Things You Need to Know to Start Your Day https://bloom.bg/2rBpplf
*******

...See More
We initiate coverage on ERAA with a BUY call and a TP of IDR 1,100. The expectation of higher quarterly revenues from recent product launches – which would lead to strong earnings growth - should support the share price performance going forward. At the current share price, ERAA is trading at an attractive valuation of just 6.1x 2017 P/E, below the average 3-year PE of 10.6x. BUY!

Recent product launches to lead to higher revenues in 2Q17 onward.Indonesia is experiencing rapid growth in mobile data usage, 4G LTE. This, we believe, offers the national leading mobile phone distributor, ERAA, ample room for business expansion going forward. Based on our recent discussions with the management, the recent product launches combined with cash back programs with telco operators have met with a positive response. This should translate into a higher top line in the coming quarters, we believe. We forecast higher revenues growth of 9.5% yoy in 2017F.

ERAA TP Rp 1.100 (68%Upside)
Fly With Drone
We initiate coverage on ERAA with a BUY call and a TP of IDR 1,100. The expectation of higher quarterly revenues from recent product launches – which would lead to strong earnings growth - should support the share price performance going forward. At the current share price, ERAA is trading at an attractive valuation of just 6.1x 2017 P/E, below the average 3-year PE of 10.6x. BUY!
Recent product launches to lead to higher revenues in 2Q17 onward.Indonesia is experiencing rapid growth in mobile data usage, 4G LTE. This, we believe, offers the national leading mobile phone distributor, ERAA, ample room for business expansion going forward. Based on our recent discussions with the management, the recent product launches combined with cash back programs with telco operators have met with a positive response. This should translate into a higher top line in the coming quarters, we believe. We forecast higher revenues growth of 9.5% yoy in 2017F.

*EIA ups 2018 U.S. oil output forecast by 0.4% to 10.01 mln bbls/day
*U.S. job openings rise in April to record 6 million

*ADRO +3.8%. Indonesian miners continued their rally as coal climbed to 5-week high.
*SMMT +13% amid company's plan to enter the mine-mouth power plant business which will need USD360 million-USD720 million of investments.
*TPIA +0.1%. Chandra Asri conducted a land purchase transaction from PT Pancapuri Indoperkasa (PIP) which will be used to support company’s business expansion plan in Cilegon.
*AISA -4.5%. In 1Q17, Tiga Pilar Sejahtera posted a net profit of IDR103.5 billion, down 15.8% yoy and 58.3% qoq.
*ASII -1.3%. Broker LG downgraded Astra International to "neutral" from "buy" amid tight competition in automotive industry.

Daily write up
Cement: At a crossroads by Mimi Halimin (mimi.halimin@miraeasset.co.id)

- While cement volume demand is improving, we note that the recovery is still in a very early stage and the modest recovery being seen now is not yet strong enough to offset negative sentiment from the YoY fall in ASP.

- However, a turning point could come if volume demand keeps showing solid improvement, leading to more stable ASP.

- For now, we maintain our Underweight call on the cement sector.

Company update
SMGR: Demand recovery in home market by Mimi Halimin (mimi.halimin@miraeasset.co.id)

- Despite our bearish stance on the cement sector, we think the improvement in consumption demand, especially for SMGR, is noteworthy.

- We revised up our revenue target to reflect the company’s better sales volume outlook as well as the revenue-boosting potential of other businesses.

- However, as ASP remained weak in April, we maintain our Hold recommendation but with a higher target price of IDR9,000.
(See: https://goo.gl/9sC7oF)

<Market Headlines>

PTPP realizes 31% from 2017 new contracts target (Bisnis Indonesia)
PTPP obtained new contract of IDR12.6tr in 5M17, increased 77% compared to IDR7.1tr from same period last year.

APLN to issue USD300mn bond (Bisnis Indonesia)
The bond which would amount to 40.4% of APLN's equity will mature in 2024 with fixed coupon rate of 5.95% p.a.

*》Pound falls as May may lost majority, euro-area inflation slows, and China growth is robust despite deleveraging campaign*

...See More
*Hung parliament?*

The pound fell to the lowest level in more than five weeks after a projection by Yougov Plc, a U.K. polling company, showed that Theresa May's Conservative Party may fall short of winning a majority in Parliament in the June 8 election. The projection, which is based on a new methodology, is out of step with other polls that continue to show a solid Conservative lead. It does, however, have people more seriously addressing the question of what it would take for Labour's Jeremy Corbyn to win the election.

*Euro data*

Euro-area inflation slowed to 1.4 percent in May, slightly below economist expectations, and the weakest reading this year. Core inflation dropped to 0.9 percent. The numbers are likely to aid ECB President Mario Draghi's call for continued accommodative monetary policy ahead of next week's governing council meeting. Meanwhile, unemployment data for the common-currency zone showed a drop to 9.3 percent, the lowest level since March 2009.

*No China slowdown*

Official manufacturing data released overnight showed that growth in China is holding up, despite worries that a leverage crackdown would feed through to investment in the world's second-largest economy. The Shanghai Composite Index rose 0.2 percent, paring its monthly loss to 1.2 percent. One place that the deleveraging campaign is apparent, however, is in the government bond market, with the nation's 10-year security falling for the second month in a row.

*In Europe, the Stoxx 600 Index was unchanged at 5:48 a.m. Eastern Time, with London's FTSE 100 Index gaining on the back of the drop in the pound. S&P 500 futures were also unchanged.*

*Coming up..*

*It is a fairly light day for U.S. data today, with Chicago PMI due at 9:45 a.m. and pending home sales at 10:00 a.m.*

*It will be worth keeping an eye on Brazil, where the central bank is expected to cut the main Selic rate by 100 basis points.*

*Also due today is a European Commission report into the future of the monetary union, which may suggest the need to issue collective bonds.*

*Here's what you should read today*

◇This is what the demise of oil looks like.

◇The world could enter a climate 'danger zone' if Trump exits Paris deal.

◇The Trump trade's so dead you may as well buy it, says Citigroup.

◇North Korea has more friends than you think.

◇Larry Fink says Europe has a brighter economic outlook than U.S.

◇The sixth-best soccer team in England is the world's richest.

◇Five reasons people are still skeptical about Bitcoin
******

FORWARD GUIDANCE
By: Bloomberg News
*》Pound falls as May may lost majority, euro-area inflation slows, and China growth is robust despite deleveraging campaign*
*Hung parliament?*
The pound fell to the lowest level in more than five weeks after a projection by Yougov Plc, a U.K. polling company, showed that Theresa May's Conservative Party may fall short of winning a majority in Parliament in the June 8 election. The projection, which is based on a new methodology, is out of step with other polls that continue to show a solid Conservative lead. It does, however, have people more seriously addressing the question of what it would take for Labour's Jeremy Corbyn to win the election.
*Euro data*
Euro-area inflation slowed to 1.4 percent in May, slightly below economist expectations, and the weakest reading this year. Core inflation dropped to 0.9 percent. The numbers are likely to aid ECB President Mario Draghi's call for continued accommodative monetary policy ahead of next week's governing council meeting. Meanwhile, unemployment data for the common-currency zone showed a drop to 9.3 percent, the lowest level since March 2009.
*No China slowdown*
Official manufacturing data released overnight showed that growth in China is holding up, despite worries that a leverage crackdown would feed through to investment in the world's second-largest economy. The Shanghai Composite Index rose 0.2 percent, paring its monthly loss to 1.2 percent. One place that the deleveraging campaign is apparent, however, is in the government bond market, with the nation's 10-year security falling for the second month in a row.
*Markets quiet*
*Overnight, the MSCI Asia Pacific Index was little changed, while Japan's Topix index slipped 0.3 percent with energy companies leading the losses.*
*In Europe, the Stoxx 600 Index was unchanged at 5:48 a.m. Eastern Time, with London's FTSE 100 Index gaining on the back of the drop in the pound. S&P 500 futures were also unchanged.*
*Coming up..*
*It is a fairly light day for U.S. data today, with Chicago PMI due at 9:45 a.m. and pending home sales at 10:00 a.m.*
*It will be worth keeping an eye on Brazil, where the central bank is expected to cut the main Selic rate by 100 basis points.*
*Also due today is a European Commission report into the future of the monetary union, which may suggest the need to issue collective bonds.*
*Here's what you should read today*
◇This is what the demise of oil looks like.
◇The world could enter a climate 'danger zone' if Trump exits Paris deal.
◇The Trump trade's so dead you may as well buy it, says Citigroup.
◇North Korea has more friends than you think.
◇Larry Fink says Europe has a brighter economic outlook than U.S.
◇The sixth-best soccer team in England is the world's richest.
◇Five reasons people are still skeptical about Bitcoin
******

U.S. equities fell lower on Tuesday as investors digested key economic data, but a rise in tech stocks helped capped losses. DJIA fell 50.81 points, or 0.24 percent, to close at 21,029.47, with Goldman Sachs as the leading decliner and Verizon outperforming. S&P 500 slipped 2.91 points, or 0.12 percent, to end at 2,412.91, with energy leading seven sectors lower and telecommunications the biggest advancer. In economic news, personal income rose 0.4 percent in April, in line with expectations, and consumer spending increased by 0.4 percent. The personal consumption expenditures price index, the Federal Reserve's preferred measure of inflation, rose 0.2 percent. Other data released Tuesday include consumer confidence reading for May, which came in at 117.9, slightly below a consensus estimate of 119. Brent oil price inched up by 0.1% to USD51.9/barrel while CPO price was down by 1.08% to MYR2,757/ton

Domestic

JCI fell by 18.94 points or -0.33% to close at 5,693, where UNVR (-2.80% to 46,000), TLKM (-1.37% to 4,330), BBCA (-0.98% to 17,600) consecutively became the lagging movers. Trading value was Rp3.9 tn and foreign investors sold Rp149 bn of stocks on a net basis. Rupiah slightly weakened by 3 points to 13,323/USD. From our technical desk, JCI is expected to trade at technical range of 5,680-5,780 with possibility of closing at higher territory.

U.S. stocks rose on Monday as PresidentDonald Trump continued his first trip abroad since taking office.

The Dow Jones industrial average advanced about 90 points, with Boeing and 3M contributing the most gains....See More
The S&P 500 rose 0.5 percent, with information technology leading advancers. Tech has been the best-performing sector in the S&P this year, rising 18 percent.

The S&P 500 and Nasdaq composite closed at record highs on Monday after a rise in tech and oil prices.

The S&P climbed about 0.5 percent, with materials leading advancers. Energy was also among the best performers after a sharp rise in crude prices....See More
Dow........20982 +85.3 +0.41%
Nasdaq....6150 +28.4 +0.46%
S&P 500...2402 +11.4 +0.48%

Moody's Investors Service says that Indosat Tbk. (P.T.)'s (Indosat Ooredoo) strong financial performance in 2016 was in line with expectations and continues to support its Ba1 corporate family rating and positive outlook.
Revenue for 2016 grew 9% year on year (YoY) to IDR29.2 trillion, primarily driven by solid growth (47% YoY) in data revenues, leading to 10% growth in cellular revenues. The cellular business remains the key contributor to the company's revenue base, contributing 83% of total revenue in 2016.
"We expect revenue to grow at 7%-8% in 2017, supported by a continued increase in the contribution from data revenue with the increase in subscribers utilizing its 3G and 4G services," says Annalisa Di Chiara, a Moody's Vice President and Senior Credit Officer.

Moody's Investors Service says that Indosat Tbk. (P.T.)'s (Indosat Ooredoo) strong financial performance in 2016 was in line with expectations and continues to support its Ba1 corporate family rating and positive outlook.
Revenue for 2016 grew 9% year on year (YoY) to IDR29.2 trillion, primarily driven by solid growth (47% YoY) in data revenues, leading to 10% growth in cellular revenues. The cellular business remains the key contributor to the company's revenue base, contributing 83% of total revenue in 2016.
"We expect revenue to grow at 7%-8% in 2017, supported by a continued increase in the contribution from data revenue with the increase in subscribers utilizing its 3G and 4G services," says Annalisa Di Chiara, a Moody's Vice President and Senior Credit Officer.